Noble Roman's Announces 3rd Quarter Financial Data; Discusses Recent Signing of a Development Agreement for 100 New Units; Announces Introduction of a New Value-Driven Pizza

INDIANAPOLIS, IN / ACCESSWIRE / November 14, 2023 / Noble Roman's, Inc. (OTCQB:NROM), the Indianapolis based franchisor of Noble Roman's Pizza and Noble Roman's Craft Pizza & Pub ("CPP"), today announced financial results for the third quarter 2023 as well as additional franchising growth in the non-traditional venue and a new value-driven pizza recently introduced in its Craft Pizza & Pubs.

The company reported a net income of $154,516, or $.01 per share, and $1.35 million, or $.06 per share, for the three-month and nine-month periods ended September 30, 2023 compared to a net income of $3,852 and a net loss of $183,105 for the comparable periods in 2022. The net income for the three-month period largely reflected growth in the franchising venue and was unaffected by the Employee Retention Tax Credit ("ERTC") refund. However, since the ERTC was recorded in the first quarter it is reflected in the results for the nine-month period.

The company generated approximately $1.06 million in net cash from operating activities for the nine months ended September 30, 2023 compared to approximately $23,000 for the comparable period in 2022.

The largest contributor to the improvement in results has been the continuous growth in the non-traditional franchising segment, which has a net contribution of $3.7 million towards overall earnings for the nine months in 2023 compared to $1.8 million in 2022. This is primarily the result of the continued growth in non-traditional franchising and is expected to expand even more with the signing of the development agreement with Majors Management, LLC for 100 new locations on October 27, 2023. The development agreement requires Majors to have 31 new locations open by June 30, 2024, 50 by December 31, 2024, and the remainder of the 100 locations open on or before September 2026. The development agreement allows for the locations to be developed throughout the 48 contiguous states, but the major concentration of the locations will be in Texas, Alabama, Georgia and Tennessee.

Total revenue for the three-month and nine-month periods ended September 30, 2023 was $3.7 million and $11.0 million, respectively, compared to $3.9 million and $11.1 million for the comparable periods in 2022. Franchising revenue for the three-month and nine-month periods ended September 30, 2023 was $1.3 million and $3.7 million, respectively, compared to $1.1 million and $3.2 million in the comparable periods in 2022. Company-owned Craft Pizza & Pub revenue for the three-month and nine-month periods ended September 30, 2023 was $2.2 million and $6.6 million, respectively, compared to $2.6 million and $7.4 million for the comparable periods in 2022. The revenue for the periods in 2022 reflected relatively higher, grand-opening sales from a few locations that opened late in the previous year which disrupts their comparability. In addition, same store sales declined during this period due to a softening of consumer spending resulting from an increase in credit card debt, an increase in gas prices and overall inflation resulting in less disposable income for the ordinary consumer.

Even though the company-owned CPP locations had a sales decline in the 3 ^rd quarter, as explained above, they continue to make significant margin contributions to the overall profitability of the company. The margin contribution for the first nine months of 2023 has been nearly $750,000 despite considerable inflationary pressure on ingredients and labor over the last year. The company has not implemented any menu price increases in its CPP operations in over a year, having determined from its extensive set of daily consumer data that a slowdown in guest spending due to the economy might be a likelihood, which was in fact experienced in the 3 ^rd quarter.

Driving additional sales with a value-conscious consumer was the motivating factor behind the company's latest R&D efforts and its new, "limited time only" pizza which was launched on November 9 ^th . Called the "oversized" XL Pizza, it is a high-value, quality pizza with a starting price of just $9.99 for a cheese-only version, with toppings just $2.50 each. The oversized, rectangular pizza is baked on an 18" x 13" half sheet-pan baking tray using the company's traditional dough recipe and is approximately 40% larger than a 14" large traditional pizza. Modeled loosely on what is known on the East Coast as "Beach Pizza" or "Bakery Pizza", the XL Pizza has significantly more cheese and toppings per square inch, fitting Midwestern and CPP guest expectations. During the first weekend of the promotion, the company's expectations were substantially exceeded, having sold approximately 750 XL Pizzas in its 9 company-operated units. Social media and online advertising began its first full week on November 13 ^th .

Results from the company's franchising venue have seen a significant increase in both revenue and margins. The company refocused its development plans toward selling more non-traditional franchises as a result of the pandemic and its aftereffects coming to an end and the determination that owners of non-traditional locations would be more willing to look at expansion options and a willingness to invest in their growth. With the sales efforts in the first nine months of this year, the company generated 54 new franchised units available for opening. During the first nine months of 2023, the company opened 40 new locations with the remaining balance of the locations sold and not yet open in various stages of development to be opened. In addition, the company has a significant pipeline of leads and prospects for future non-traditional franchise sales.

Scott Mobley, the company's President & CEO, stated, "As we announced earlier in the year, several initiatives were implemented in both the non-traditional and Craft Pizza & Pub venues, and it is rewarding to see that these efforts are paying off. The company has focused more of its resources on expanding non-traditional franchising efforts, which is successfully driving significant growth. In the Craft Pizza & Pubs, we continue to use creative means to control inflationary pressures on food and labor costs, and the new XL Pizza gives us an exciting tool to appeal to price conscious consumers. Finally, we are continuing to focus efforts successfully to tightly control corporate level overhead expenses."

The following table sets forth the revenue, expense and margin contribution of the company's Craft Pizza & Pub venue and the percentage relationship to its revenue:

		Three months ended September 30,														Nine months ended September 30,
Description		2022						2023								2022						2023
Revenue		$	2,587,182			100%			$	2,175,219			100%			$	7,374,143			100%			$	6,639,213			100%
Cost of sales			569,470			22.0				430,826			19.8				1,562,878			21.2				1,359,126			20.5
Salaries and wages			712,239			27.5				643,081			29.6				2,155,734			29.2				1,913,450			28.8
Facility cost including rent, common area and utilities			432,126			16.7				399,684			18.4				1,232,359			16.7				1,210,276			18.2
Packaging			93,647			3.6				71,586			3.3				259,390			3.5				220,694			3.4
Third-party delivery fees			39,330			1.5				26,227			1.2				115,677			1.6				86,444			1.3
All other operating expenses			348,448			13.5				403,230			18.5				1,090,641			14.8				1,124,658			16.9
Total expenses			2,195,260			84.8				1,974,635			90.8				6,416,679			87.0				5,914,648			89.1
Margin contribution		$	391,922			15.2%			$	200,584			9.2%			$	957,464			13.0%			$	724,565			10.9%

The following table sets forth the revenue, expense and margin contribution of the company's franchising venue and the percent relationship to its revenue:

		Three months ended September 30,														Nine months ended September 30,
Description		2022						2023								2022						2023
Royalties and fees franchising		$	1,119,793			100%			$	1,310,284			100%			$	3,218,401			100%			$	3,671,160			100%
Salaries and wages			227,441			20.3				193,781			14.8				637,695			19.8				648,342			17.7
Trade show expense			90,000			8.0				44,936			3.4				225,000			7.0				229,056			6.2
Travel and auto			22,348			2.0				37,908			2.9				81,158			2.5				96,057			2.6
All other operating expenses			159,689			14.3				119,152			9.1				500,220			15.6				(1,009,710	)		(27.5	)
Total expenses			499,478			44.6				395,777			30.2				1,444,073			44.9				(36,255	)		(1.0	)
Margin contribution		$	620,315			55.4%			$	914,507			69.8%			$	1,774,328			55.1%			$	3,707,415			101%

The following table sets forth the revenue, expense and margin contribution of the company-owned non-traditional venue and the percent relationship to its revenue:

		Three months ended September 30,														Nine months ended September 30,
Description		2022						2023								2022						2023
Revenue		$	195,647			100%			$	247,252			100%			$	505,891			100%			$	707,217			100%
Total expenses			201,013			102.7				240,245			97.2				503,639			99.6				566,225			80.1
Margin contribution		$	(5,366	)		(2.7)%			$	7,007			2.8%			$	2,252			.4%			$	140,992			19.9%

Other Expenses

Depreciation and amortization expense were $95,517 and $286,550 for the three-month and nine-month periods ended September 30, 2023 compared to $112,555 and $337,994 for the comparable periods in 2022, respectively. The decrease in depreciation expense was the result of not opening any new corporate-owned locations to date in 2023.

General and administrative expenses were $519,291 and $1,564,433 for the three-month and nine-month periods ended September 30, 2023, compared to $518,466 and $1,598,689 for the comparable periods in 2022, respectively. This reflects the Company's focus on minimizing costs while growing revenue through franchising.

Operating income was $513,947 and $2,744,056 for the three-month and nine-month periods ended September 30, 2023 compared to $381,860 and $822,587 for the comparable periods in 2022, respectively. The increase was a result of growth in the franchising venue with a slight decline in Craft Pizza & Pub profitability while actually obtaining a small reduction in administrative expenses. The nine-month period results also benefited from the recognition of the ERTC in the first quarter of 2023.

Interest expense was $359,431 and $1,121,505 for the three-month and nine-month periods ended September 30, 2023 compared to $378,008 and $1,067,605 for the comparable periods in 2022, respectively. The interest expense was reduced by the monthly principal payments required by the loan agreement in addition to voluntary payments to reduce principal totaling $578,897.

The Company's current ratio was 1.8-to-1 as of September 30, 2023, compared to 1.3-to-1 as of December 31, 2022.

The statements contained in this press release concerning the Company's future revenues, profitability, financial resources, market demand and product development are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) relating to the Company that are based on the beliefs of the management of the Company, as well as assumptions and estimates made by and information currently available to the Company's management. The Company's actual results in the future may differ materially from those indicated by the forward-looking statements due to risks and uncertainties that exist in the Company's operations and business environment, including, but not limited to the continuing effects of the COVID-19 pandemic and its aftermath, competitive factors and pricing and cost pressures, non-renewal of franchise agreements or the openings contemplated by the development agreement not occurring, shifts in market demand, the success of franchise programs, including the Noble Roman's Craft Pizza & Pub format, the Company's ability to successfully operate an increased number of Company-owned restaurants, general economic conditions, changes in demand for the Company's products or franchises, including its new XL Pizza, the Company's ability to service its loans, the acceptance of the remaining quarter amended federal Form 941 returns relating to the ERTC, the impact of franchise regulation, the success or failure of individual franchisees and inflation, other changes in prices or supplies of food ingredients and labor and, as well as the factors discussed under "Risk Factors" contained in this Company's Annual Report on Form 10-K for the year ended December 31, 2022. Should one or more of these risks or uncertainties materialize, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. If activist stockholder activities ensue, the Company's business could be adversely impacted.

FOR ADDITIONAL INFORMATION, CONTACT:

For Media Information: Scott Mobley, President & CEO (smobley@nobleromans.com)
For Investor Relations: Paul Mobley, Executive Chairman (pmobley@nobleromans.com)
Mike Cole, Investor Relations: 949-444-1341 (mike.cole@armaadvisoryservices.com)

Noble Roman's, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)

Assets		December 31, 2022				September 30, 2023
Current assets:
Cash		$	785,522			$	563,646
Employee Retention Tax Credit Receivable			-				507,726
Accounts receivable - net			824,091				809,807
Inventories			997,868				942,763
Prepaid expenses			424,822				691,317
Total current assets			3,032,303				3,515,259
Property and equipment:
Equipment			4,351,558				4,369,954
Leasehold improvements			3,116,030				3,127,880
Construction and equipment in progress			63,097				62,632
			7,530,685				7,560,466
Less accumulated depreciation and amortization			2,817,477				3,104,026
Net property and equipment			4,713,208				4,456,440
Deferred tax asset			3,374,841				3,100,651
Deferred contract cost			934,036				1,121,826
Goodwill			278,466				278,466
Operating lease right of use assets			5,660,155				5,123,819
Other assets including long-term portion of receivables - net			350,189				395,935
Total assets		$	18,343,198			$	17,992,396
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses		$	650,582			$	192,440
Current portion of operating lease liability			799,164				799,164
Current portion of Corbel loan payable			866,667				1,000,000
Total current liabilities			2,316,413				1,991,604
Long-term obligations:
Term loan payable to Corbel - net of current portion			7,470,900				6,467,678
Corbel warrant value			29,037				29,037
Convertible notes payable			622,864				575,000
Operating lease liabilities - net of current portion			5,103,286				4,574,360
Deferred contract income			934,036				1,121,826
Total long-term liabilities			14,160,123				12,767,900
Stockholders' equity:
Common stock - no par value (40,000,000 shares authorized, 22,215,512 issued and outstanding as of December 31, 2022 and as of September 30, 2023)			24,819,736				24,837,605
Accumulated deficit			(22,953,074	)			(21,604,713	)
Total stockholders' equity			1,866,662				3,232,892
Total liabilities and stockholders' equity		$	18,343,198			$	17,992,396

Noble Roman's, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)

		Three months ended September 30,								Nine months ended September 30,
		2022				2023				2022				2023
Revenue:
Restaurant revenue - company-owned restaurants		$	2,587,182			$	2,175,219			$	7,374,143			$	6,639,213
Restaurant revenue - company-owned non-traditional			195,647				247,252				505,891				707,217
Franchising revenue			1,119,793				1,310,284				3,218,401				3,671,160
Administrative fees and other			5,961				6,657				25,226				22,068
Total revenue			3,908,583				3,739,412				11,123,661				11,039,658
Operating expenses:
Restaurant expenses - company-owned restaurants			2,195,261				1,974,635				6,416,678				5,914,648
Restaurant expenses - company-owned non-traditional			201,013				240,245				503,639				566,225
Franchising expenses			499,478				395,777				1,444,073				(36,255	)
Total operating expenses			2,895,752				2,610,657				8,364,391				6,444,618
Depreciation and amortization			112,555				95,517				337,994				286,550
General and administrative expenses			518,466				519,291				1,598,689				1,564,433
Total expenses			3,526,723				3,225,465				10,301,074				8,295,602
Operating income			381,860				513,947				822,587				2,744,056
Interest expense			378,008				359,431				1,067,605				1,121,505
Income (loss) before income taxes			3,852				154,516				(245,018	)			1,622,551
Income tax expense (benefit)			-				-				(61,913	)			274,190
Net income (loss)		$	3,852			$	154,516			$	(183,105	)		$	1,348,361
Earnings per share - basic:
Net income (loss) before income tax		$	.00			$	.01			$	(.01	)		$	.07
Net income (loss)		$	.00			$	.01			$	(.01	)		$	.06
Weighted average number of common shares outstanding			22,215,512				22,215,512				22,215,512				22,215,512
Diluted earnings per share:
Net income (loss) before income tax		$	.00			$	.01			$	(.01	)		$	.07
Net income (loss)		$	.00			$	.01			$	(.01	)		$	.06
Weighted average number of common shares outstanding			23,513,954			$	23,581,300				23,513,954			$	23,581,300

SOURCE: Noble Romans, Inc.

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